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The euro and prices: changeover-related inflation and price convergence in the euro area

Jan-Egbert Sturm (), Ulrich Fritsche (), Michael Graff, Michael Lamla (), Sarah Lein (), Volker Nitsch (), David Liechti and Daniel Triet

No 381, European Economy - Economic Papers 2008 - 2015 from Directorate General Economic and Financial Affairs (DG ECFIN), European Commission

Abstract: The purpose of the study is to examine the effects of the 'euro cash changeover' on consumer prices in the euro area. The report begins by describing price developments at the time of the introduction of euro notes and coins. The study also investigates the impact of price developments at the euro changeover on different households by socio-economic group. The third part of the report focuses on inflation perceptions and a fourth section explores the cross-border convergence of prices since the euro changeover. The following findings can be highlighted: (1) it appears that aggregate inflation rates were largely unaffected by the introduction of the euro; (2) overall, differences in inflation rates across different types of households are small; (3) inflation perceptions are mainly driven by lagged perceptions, inflation expectations and actual inflation while different individual inflation experiences also help to explain the 'jumps' in perception data; (4) price differentials have generally declined over time across European countries though there is no sizeable euro introduction convergence effect.

Keywords: The Euro and Prices: Changeover-related Inflation and Price Convergence in the Euro Area; euro changeover; inflation; perceptions; convergence; household-specific inflation; Sturm; Fritsche; Graff; Lamla; Lein; Nitsch; Liechti; Triet (search for similar items in EconPapers)
JEL-codes: E31 E32 (search for similar items in EconPapers)
Date: 2009-06
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